Macro concerns drag German consumer confidence to seven-month low

Consumer morale in Germany has fallen to a seven-month low with fears about a recession and unemployment weighed heavily on income expectations, according to a closely watched survey by the GfK Group and the Nuremberg Institute for Market Decisions (NIM).

The forward-looking Consumer Climate Indicator for December fell to -23.3, down from a revised -18.4 in November, GfK and NIM said on Wednesday.

This was the lowest level since May and below the consensus forecast of -18.6, pulling back after hitting a two-year high the previous month.

Rolf Bürkl, consumer expert at NIM, labelled December's retreat as a "significant setback in consumer sentiment". Bürkl said: "Consumer uncertainty has increased again recently, as evidenced by the rising willingness to save. There is also another uncertainty factor: concerns about job security in Germany are growing."

The survey said reported job cuts were weighing heavily on confidence, along with news that production jobs were being relocated abroad.

Meanwhile, German consumers continued to take a pessimistic view on the economic situation over the coming 12 months, with the economic indicator falling to -3.6, marking the fourth straight decline.

"Rising insolvency figures and reports of impending job losses further dampen economic expectations. Both economic experts and the German government have revised their growth forecasts for this year downwards to a 'red zero'. The forecasts for next year are also rather modest," NIM said.